Abstract
EPC contracts are the most common form of contract used to undertake construction works on large-scale. EPC Contractor has to deliver a complete facility for a guaranteed price by a guaranteed date and it must perform to the specified level. Failure to comply with any requirements will usually result in the contractor incurring monetary liabilities Risks allocation between the contractor and the project company that satisfies the lenders are bankable contracts. Lenders prefer for one strong party to accept full responsibility, delivering the works on time, on budget and to meet the required technical and performance specification. At times EPC contractors act as a consortium. The work is divided between the parties, such split / cooperation is encouraged keeping intact the efficiency and single point responsibility. The key driver for adopting a split structure is also the tax efficacy considering all financial risks as well. The EPC contract constitutes a large portion of the project cost. Therefore, apart from being satisfied that the project is financially viable, the primary interest of lenders during the pre-contract stage will be to ensure only well qualified credit worthy EPC contractors are considered.
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